South Africa’s online retail jumps to over $2 billion

South Africa’s online retail jumps to over $2 billion

New research findings have revealed that in just two years, online retail in South Africa has more than doubled to over $2 billion (R30 billion), as the COVID-19 pandemic accelerated the shift in consumer payment methods.

According to the study ‘Online Retail in South Africa 2021’, which was conducted by technology market research firm World Wide Worx, supported by Mastercard, Standard Bank and Platinum Seed, the total growth for online retail in South Africa in 2020 came to 66%, bringing the total of online retail in South Africa to R30 billion.

Arthur Goldstuck, Managing Director of World Wide Worx and principal analyst on the project said, “The most astonishing aspect of this total is that it is more than double the R14,1-billion ($1 billion) reached in 2018, in just two years.”

“It is also 50% higher than the total forecast for 2020 three years ago, when online retail in South Africa was expected to reach R20 billion ($1,4 billion) by 2020,” added Goldstuck.

In comparison to traditional retail, the research found that in 2018, the R14,1-billion ($1 billion) in online retail represented 1.4% of total retail, estimated at the time at R1,07-trillion ($71,5 billion). Online had outpaced traditional retail growth throughout the past 20 years, since it came off a low base, but traditional retail still grew every year until 2019. In 2020, it slumped as a result of lockdown as well as economic stress.

According to preliminary data from Stats SA shows, at current prices, total retail fell by 4.2%, to R1,05-trillion ($71,4 billion)at current prices. The percentage of retail made up by online retail sales came to 2.8% – exactly double the percentage for 2018.

The total online retail sales are expected to grow to around R42-billion ($3,02 billion) in 2021 and Goldstuck says the findings were not a surprise, as Mastercard had already released the findings of a survey of 1,000 South African consumers in November 2020, which found that 68% of respondents were shopping more online since the onset of the pandemic.

The research found that categories experiencing the highest growth, aside from data and airtime top-up, were clothing, at 56%, and groceries, at 54%.

More than two-thirds – 68% – of these consumers said they used the time during the pandemic as a positive learning experience, while the demand for online entertainment also surged, with 52% of respondents saying they have spent more money on virtual experiences than they did before the pandemic.

The majority had participated in video calls for work or leisure (88%), three quarters (75%) had watched TV or films through an online subscription service, and nearly half (47%) had taken part in a virtual cooking class.

Suzanne Morel, Country Manager at Mastercard, South Africa said, “This trend appears to be here to stay as 71% of respondents say they will continue to shop online post-pandemic. Now more than ever people need access to the digital economy”

The study is being released in three phases, with the first focused on overall market size and online consumer demographics. The first report is based on data drawn from the TGI consumer survey of 16,000 participants, conducted by Ask Afrika over six months.

Subsequent phases of Online Retail in South Africa 2021, to be released later in the year, will include an analysis of the performance of online retailers, based on a survey of a wide range of providers, while the third phase will provide deep insights into global trends.